Tesla's Financial Strains: Analyst Maintains Sell Rating Amid Earnings Miss and Margin Pressures

Wells Fargo analyst Colin Langan maintains a Sell rating on Tesla with a $120.00 price target due to anticipated earnings miss in Q2, lower EV credits, weaker Energy Generation margins, and expiration of IRA EV buyer tax credit. Tariffs on Chinese batteries used in Energy Generation business are also expected to impact margins negatively.

Tesla Inc. released its Q2 2025 delivery numbers on July 2, 2025, with a mixed reception from analysts and investors. Despite analysts' consensus labeling it a "miss," Tesla's stock price rose by 5% on July 2 and showed mild bullish trends on July 3 before closing down by 0.01% [1].

Trend Analysis

Tesla's market share has been shrinking for nearly five years, with significant competition from American carmakers like Ford and General Motors, as well as overseas competitors such as Hyundai and Volkswagen Group. The electric vehicle (EV) market, which had been growing rapidly from 2021 to 2023, is now cooling off due to factors such as the lack of universal charging infrastructure, high costs, and affordability crises [1].

Tesla Delivery Trends

By the end of 2024, Tesla's Model 3/Y platform, which accounted for 97% of its production share in 2021, had dropped to 95% in 2025. In the first half of 2025, this share rose back to 97%. Tesla's production and delivery numbers tend to align closely, with inventories running low and efficient regional demand mapping [1].

Opportunities and Hurdles

While Tesla's ex-China deliveries showed a 28% decline in Q1 2025 compared to 2024, they rebounded by 17% in Q2 2025, trending at an 18% decline as of H1 2025. China retail deliveries, on the other hand, were down 20% in Q1 2025 but have shown signs of recovery [1].

Market Outlook

Wells Fargo analyst Colin Langan maintains a Sell rating on Tesla with a $120.00 price target, citing anticipated earnings misses in Q2, lower EV credits, weaker energy generation margins, and the expiration of IRA EV buyer tax credits. Additionally, tariffs on Chinese batteries used in the energy generation business are expected to negatively impact margins [2].

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References

[1] https://leverageshares.com/en-eu/insights/why-teslas-dismal-q2-delivery-numbers-lifted-the-stock-price/
[2] https://www.wellsfargo.com/about/financial-news/analysts/colin-langan